This is the sixth in a series of articles on the U.S. banking system. Each article will cover one type of financial institution that engages in banking. This sixth article covers national banks. The last article covered community banks. Future articles will cover additional types of banks.
National Banks Embracing the Tech Revolution
If you’re wondering what a national bank is, there’s a simple way to find out. The institution should have national or national association in its name. Some examples include City National Bank, Eastbank, National Association and First National Bank. Although called a national bank, the institution may or may not have nationwide operations. National banks are supervised by the Office of the Comptroller of the Currency.
Choosing a national bank has some advantages. "They have more ATM locations and their branches are more ubiquitous – they even have partner banks overseas," says Linda Sherry, Director, National Priorities for Consumer Action.
There’s one area Rohit Arora, co-founder and CEO of Biz2Credit says national banks have separated themselves from other institutions, "They have invested a lot of money in technology. They are mobile tech leaders."
Tech bells and whistles create all sorts of new features for customers. "National banks use third party aggregators so customers can see a lot data, they can benchmark themselves against others with similar accounts, see what perks they are getting and other information," says Arora.
For sure, customers have a lot of choice in how to bank, and services to use, from mobile wallets, to wave and pay apps, to prepaid cards.
National banks are also upgrading their branches, reducing the number of branches and using less people in the branches. Tellers are disappearing and kiosks growing. The trend is toward more automation and digitization.
But the jury is still out as to whether this is a good thing or not. According to a recent survey from TimeTrade, a SaaS scheduling service, consumers are not ready for fully automated branches. When banking customers were asked how they felt about experimental bank branches that have no tellers and every transaction is automated, more than half would still like the option of being able to talk to a teller. People still want to meet a bank specialist in person at the bank. Fifty seven percent of those polled, when asked how they would like to interact with their financial institution, answered in-person at the branch.
What’s keeping those that run national banks up at night? Cybersecurity. "Cyber breaches and security are becoming more and more important. Banks are under scrutiny by regulators since the recession, and must adjust to a new regulatory focus on consumer protection. Big banks have to take customer complaints more seriously now to avoid reputational risk because the CFPB has made complaint data public," says Sherry.
The non-bank mobile payment platform is also giving banks a run for their money, says Sherry. "However, since most of the mobile payment platforms link to credit and debit cards, the impact on profits shouldn’t be so bad." says Sherry. While banks aren’t the only game in town, "I don’t see them shriveling up and dying."
One thing you might miss with a national bank though, is good old fashioned customer service. "The concept of a relationship with customers has completely gone away. You’re just a number. If you have an issue, realize that the branch level people of national banks have no power, they just push you toward the call center. With a small bank, you can meet with the president," says Arora.
It comes down to what matters most to you. Says Sherry, "You may not be treated personally, but many of the big banks do have loyalty perks and if you keep enough money on deposit you can get some great deals. Of course this benefits mostly the wealthier customers, but low income people can benefit from having a bank account if they opt out of debit overdrafts, use direct deposits of their paychecks and manage their accounts carefully."